How much do you think it costs to make a pair of Nike shoes in Asia? • Hacker News Board

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#41

Post by Cerium » Wed, Apr 09, 2025, 2:52 PM UTC

megaman821 wrote: post #25

For me this glosses over on why would see the same 100% markup on the customs duties as they rise. A 100% at a low tariff rate is just pricing in the increased paperwork and accounting, but at a super-high tarrif rate this become pretty unjustifiable. Why is not more likely customs becomes mostly a passthrough cost?

It is a passthrough cost because of the business models. In this example the importer (Nike) is paying the cost, and then retailers are buying the product from them at a price that includes the tariff. The retailers don't care why the shoe is $75 or $50. A retailer is concerned that there are customers willing to pay a price which enables them to make a profit. For most retail businesses that price needs to be about 2x cost of goods.

Until you get to extremely high-end goods this multiplier system works fairly well to accommodate the various costs the business has. It is an assumption that there are many business costs that scale linearly with sale price. In reality not all do, but there are many: insurance, return costs, loss, and customer service expectations all scale with dollar values.

Edit: if we switched from an import tariff to a foreign goods sales tax we could avoid this particular problem.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#42

Post by rayiner » Wed, Apr 09, 2025, 2:52 PM UTC

Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries.

We need to anticipate a future where China is equal to America on a per capita basis, but four times bigger. Is that a world where “Designed by Apple in California, Made in China” still makes sense? What will be America’s competitive edge in that scenario?

What seems most likely to me in the future is that the US will find itself in the same position the UK is in now. Dominating finance and services won’t mean anything when both the IP and the physical products are being produced somewhere else.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#43

Post by myrmidon » Wed, Apr 09, 2025, 2:52 PM UTC

xienze wrote: post #12

ravelantunes wrote: post #6

Earlier quoted context omitted.

The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.

That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?

Self sufficiency is just not a credible argument here.

This is about consumer footwear, not agriculture (nor all of manufacturing).

The US (and most other nations that can afford to) is perfectly used to throwing ~$20 billion at the sector to keep local agriculture operational.

We did not do this for literally every industry in the past because we had (and have) neither the idle workforce to do this, nor does the local population want to do the work (even for slightly uncompetitive wages), nor do consumers want to pay for the difference.

My personal prediction is that people will realize this pretty soon with the consequences of the Trump tariffs manifesting and the whole thing will be rolled back and scaled down, with pretty much nothing to show for it.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#44

Post by ersiees » Wed, Apr 09, 2025, 2:54 PM UTC

So, 100$ Nike shoes will soon be 125$.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#45

Post by os2warpman » Wed, Apr 09, 2025, 2:54 PM UTC

xienze wrote: post #12

ravelantunes wrote: post #6

Earlier quoted context omitted.

The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.

That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?

Domestic production that is perceived to benefit national sovereignty is protected.

See: farming, energy, and defense spending/subsidies.

There is no point in history where any nation, anywhere, has needed to be self-sufficient in the production of Nike Air Maxes.

That being said, my sneakers, New Balance 990v6s, were made in the US-- probably Maine. They're $200.

The shoes I typically wear for work, Red Wing Iron Rangers or Work Chukkas, were made in the US-- probably Minnesota. They're $350 and $290 respectively.

I don't know if increased volume will decrease the prices by much, they're only higher than premium imports by a little bit.

There is domestic production already here.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#46

Post by onlyrealcuzzo » Wed, Apr 09, 2025, 2:56 PM UTC

Clubber wrote: post #3

>The second thing we see is that Asian manufacturing in Asia produces US jobs. You go to Footlocker to buy a pair of $100 shoes because you can afford them. This creates jobs for the Footlocker employees, Nike designers, marketing teams, and other US people throughout this chain. In all fairness, most of those jobs would still exist if manufacturing was brought onshore. The fact that they were manufactured in Asia ma…

The point is - there isn't a market for $400 crappy basketball shoes.

There is a market for $120 ones...

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#47

Post by 999900000999 » Wed, Apr 09, 2025, 2:56 PM UTC

JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

They'll start forcing us to make Nikes in prison.

Even then the quality wouldn't be up to par. Since we've collectively agreed we don't need to have due process anymore, I guess I can look forward to making shoes will I'm being indefinitely detained.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#48

Post by wegfawefgawefg » Wed, Apr 09, 2025, 2:56 PM UTC

bitshiftfaced wrote: post #13

JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

Isn't that an even more compelling reason to do it, since unemployment is already low? It means more vertical integration, more domestic investment and productive capital.

i think a lot of people are fixating on the market.

I will share a metaphor you can spread.

I run a mile every morning not because it is the most calorie efficient way to get around, nor because it is the most monetarily productive use of my time, but because it keeps my legs strong and me healthy.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#49

Post by itishappy » Wed, Apr 09, 2025, 2:58 PM UTC

xienze wrote: post #9

JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

I think you're missing that the bigger value is having the manufacturing on your home soil instead of depending on being in the good graces of China.

Strategic shoe manufacturing?

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#50

Post by p_j_w » Wed, Apr 09, 2025, 2:59 PM UTC

xienze wrote: post #12

ravelantunes wrote: post #6

Earlier quoted context omitted.

The author’s point is that the lower cost of goods coming from Asia results in increased demand, which then generates more jobs in the post-manufacturing part of the chain.

That completely discounts the strategic value of self-sufficiency. I mean, why not outsource ALL manufacturing and agriculture if someone else can do it cheaper? Surely that wouldn't come back to bite us, right?

We don't have the labor pool for self-sufficiency unless we want to drastically scale back how we live.